Ofcom delivers ultimatum to BT

Ofcom has challenged BT to come up with proposals for opening up its networks to competitors to help speed the growth of telecoms services including broadband - or face a possible Competition Commission investigation.

The communications regulator has backed off from calling for an immediate break-up of BT, noting that most of the company's competitors in the telecoms industry felt that this approach would be "too disruptive and expensive".

Ofcom said it instead favoured working with BT to deliver "real equality of access" to its networks and called on the company to come up with "prompt and clear proposals" about how this could be achieved.

In proposals published today for a major shake-up in the way the telecoms sector is regulated, Ofcom said it expected BT to help boost the growth of broadband services by measures including giving competitors greater access to its "local loop" infrastructure - the cables that connect homes and businesses to its networks.

"Ofcom believes that if BT delivers real equality of access, its competitors will benefit from the certainty needed to make sustainable investments in the market. This in turn will increase the scope for effective, long term competition, and as the market becomes more competitive, so the scope for a withdrawal of regulation will increase," the regulator said today, as it published its phase two proposals for the future regulation of the telecoms sector.

But it warned that "if real equality of access is not delivered, Ofcom will consider an investigation under the Enterprise Act and potential subsequent referral to the Competition Commission".

"Real equality of access would mean that BT must offer competitors... wholesale products and prices, as are made available by BT to its own retail businesses, and transactional processes, as made available by BT for the use of its own retail business.

"Delivering this would not only require BT to make changes to its wholesale products, product development process and transactional processes, it would also require BT to commit to substantive behavioural and organisational changes."

Ofcom said such changes were a "necessary pre-condition" if it was to have any confidence that BT would not "discriminate unfairly against competitors".

"For 20 years, regulation has failed fully to address the problem of BT's control of the infrastructure connecting consumers to the network. To date, the manner in which BT has controlled access to the economic bottlenecks in its network has had an impact on the rollout of important wholesale products with the potential to offer greater choices to the consumer," the regulator added.

"In broadband, the products affected include local loop unbundling and datastream; in voice they include and carrier pre-select and wholesale line rental."

Ofcom is asking interested parties to submit their views on its phase two proposals for overhauling telecoms regulation by February 3 2005.